The owners and charterers of ships unable to sail through the the Suez Canal for nearly a week face at least $24 million in expenses they will be unable to recoup as their insurance policies do not cover them, industry sources say.
Up to 400 ships, which include oil tankers and vessels carrying goods to consumers that had been stuck, are counting the cost after traffic through Egypt’s Suez Canal was halted for six days.
A giant container ship that had blocked the waterway since March 24 was refloated on Monday, the canal authority said.
Ships typically have various types of insurance, including protection & indemnity (P&I) for pollution and injury claims. Separate hull and machinery policies cover vessels against physical damage.
“Both exclude loss of earnings,” Claudio Blancardi, underwriting director with ship insurer Nordic Marine, said.
Shipping sources said daily expenses were estimated to reach between $10,000 to $15,000 a day for each vessel and it would have to be written off. This includes oil tankers.
“Tanker owners don’t get paid demurrage (delay costs) for canal delays, they incur the waiting days and cost on their own account,” one shipping source said on condition of anonymity.
Apart from ship owners, charterers of ships who hire the vessel for an extended period would also be unable to claim back losses, leaving them also having to cover these costs, the sources said.
They could also face more than six days of lost expenses as the traffic jam of ships makes its way down the canal.
These expenses include additional fuel costs, lost days when the ship was unable to complete its voyage and extra supplies.
“It’ll take days rather than a day to clear the backlog,” William Robinson, a managing director at insurance firm Charles Taylor, said.
Owners of cargo on the Ever Given container ship or other ships delayed in the Canal may also not be covered by insurance.
“Generally, if you are shipping anything other than perishable cargo, you don’t buy delay insurance,” Marcus Baker, global head, marine and cargo, at insurance broker Marsh, said.
Fitch Ratings said on Monday that reinsurers could face losses totalling hundreds of millions of euros from the blockage..
However, industry sources said insurance and reinsurance claims would likely mainly be for damage to the Ever Given itself and to the Canal, as well as dredging costs.
UK Club, the P&I insurer for the Ever Given, said in a statement on Monday it had insured the ship’s owner Shoei Kisen for “certain third party liabilities that might arise from an incident such as this – including, for example, damage caused to infrastructure or claims for obstruction”.
The ship’s hull is insured by Japan’s MS&AD Insurance Group. Industry sources said the hull policy would also cover the salvage costs.
Brokers reckon the ship will have been insured for $100-140 million.